Dingell had asked the regulators to look into a complaint he had received from a US gas distribution company alleging that the speculative nature of hedge fund trading had caused wild swings in the price of gas, to the detriment of traditional gas users.

The New York Mercantile Exchange said that, in response to Dingell's demand, it had studied trading over the first eight months of 2004. It found hedge funds were responsible for less than 10% of trading, by volume, in natural gas contracts and less than 3% of crude oil futures volumes. It said independent traders are responsible for about half the trades, by volume.

The regulators said the market had suffered from volatility because supply and demand were not very responsive to price changes in the short-term, combined with a longer-term trend towards higher natural gas prices.

Two of the regulators, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission, said hedge funds provided an essential role in the market by providing liquidity and price discovery.

The Commodity Futures Trading Commission said it would continue to monitor hedge fund trading activity in the natural gas and other markets.